Budget carrier AirAsia, credited with changing the market dynamics in Southeast Asia by offering bottom-low fares, does not seem to have an easy passage in the price-sensitive Indian market.

Its Indian subsidiary AirAsia India, in which Tata group is a partner, has pulled out one of its inaugural flights on Bangalore-Chennai route due to operational losses. Moreover, the airline has also been treading cautiously in adding capacity in the market and has missed its fleet expansion targets. “AirAsia India has withdrawn flights from the Bangalore-Chennai route. They were selling tickets at a price which was not sustainable,” an industry source said.

The airline did not respond to an email query from Financial Chronicle on the issue.

AirAsia had earlier said that some of the domestic routes might have been saturated in traffic volume, pointing towards low passenger load factor on the Bangalore-Chennai flight. The airline currently operates a fleet of four Airbus 320 aircraft with the fourth plane joining operation last month. As per latest data released by Directorate General of Civil Aviation (DGCA), AirAsia India flew 81,000 travellers in February, 11 per cent lower than January. It, however, recorded higher flight occupancy at 77.9 per cent during this period.

“India is a difficult market. You can’t always be right here. But AirAsia is flexible in its approach. It had earlier said it would focus on south India and would not operate flight to Delhi because of high airport charges. It has now changed its plan and announced to start flights to Delhi realising high traffic volume on the route,” said Rajan Mehra, Universal Aviation managing director and former India head of Qatar Airways.

AirAsia India which started its operations last June is estimated to have lost about Rs 21 crore (12.7 million Malaysian ringgit) in the quarter ending December 2014. The airline CEO Mittu Chandilya had recently said that he expected to reach break-even mark in June when sixth aircraft would be inducted.

AirAsia India is a three-way joint venture between Tata Sons, AirAsia and Telestra Tradeplace. While Malaysian low-cost airline AirAsia Berhad holds 49 per cent in the company, Tata Sons hold 30 per cent in it. Arun Bhatia of Telestra Tradeplace hold the remaining 21 per cent in the Indo-Malaysian air-carrier.

The domestic aviation market is dominated by low-cost carriers. Riding high demand for affordable air travel these carriers have gradually increased their share in the pie controlling nearly 60 per cent of the market. IndiGo, the no-frill carrier that started its operation in 2006, has grabbed the largest share of the market controlling 37.1 per cent share on the back of aggressive fleet and network expansion.
_________________Aerosexual...!

AirAsia India (I5, Chennai) CEO Mittu Chandilya has announced that Delhi Int'l will be the carrier's next base following its Bangalore Int'l primary hub. Currently, the Indian capital is a base to two other LCCs - IndiGo Airlines (6E, Delhi Int'l) and Spicejet (SG, Delhi Int'l).

"Excited to announce 1st of our newest destinations - New Delhi. Will also be our Northern Hub. Opening for sales soon!" he said via his official Twitter account.

The Hindu newspaper reports the budget carrier will base two incoming A320-200 (sl)s at the airport alonside at least 60 crew members, including 20 pilots. _________________

Air Asia India started operations in June 2014 amidst much fanfare, including an event where bikers with Air Asia flags and the top management in open deck bus made their way from Bengaluru city to the airport – their main base. I have always been skeptical about growth and sustenance for Air Asia India and while I wish good luck to every airline and operator, so far I have been proved right in terms of Air Asia India. So far we have only seen a serious foot in mouth syndrome which has made me compare the airline with Paramount – another airline which was famous only for announcements._________________www.networkthoughts.in

Air Asia India started operations in June 2014 amidst much fanfare, including an event where bikers with Air Asia flags and the top management in open deck bus made their way from Bengaluru city to the airport – their main base. I have always been skeptical about growth and sustenance for Air Asia India and while I wish good luck to every airline and operator, so far I have been proved right in terms of Air Asia India. So far we have only seen a serious foot in mouth syndrome which has made me compare the airline with Paramount – another airline which was famous only for announcements.

I think I5 has realized that one cant remain a regional airline and be relevant in India . Hence the DEL move . I see them adding planes and flights irrespective of the 5/20 announcement .

As far as making announcements goes . I feel in the airline business any publicity is good publicity . Branson lived by this rule and still does . For an airline the size of I5 , they need every mention anywhere possible .

I see them growing . Their CEO has a strong focus on breaking even which is a good thing . They have learnt from the likes of KF and hence the focus on profitability .

I just got back from BLR last night on I5 . The morning flight out to BLR had 172 out of 180 onboard . The flight back had about 15 spare seats . So irrespective of group booking they are managing to fill up their planes . Yes they have promo fares on but that should help them have folk experience them and then choose to fly with them in future .

They are brilliant inflight with great crew , super leather seats and very reasonably priced tasty food .

Once again Sir, thanks for a very nice and informative article. I count myself really lucky to be among the select few, to receive regular updates about most airlines around, including some of your personal experiences with airlines. I especially remember the haughty response from Air Asia India, and when your official complaint shook `em up.
You make some rather pertinent points in this article, which I have read, and re-read quite a few times since morning. I have always looked at Tony Fernandez with some interest, and his airline coming to India, plus the tie-up with perhaps India's best-known Industrial house, made things even more interesting. You have compiled the events, the announcements, and the facts and figures, beautifully.
You have also seamlessly pointed to many articles in the press, which makes your article a one-stop joint for a thorough self-complete analysis on the given topic. Lovely.
The analysis of the Chennai-Bengaluru pullout was very interesting.
The Delhi addition, and that too at T3, came as a bit of a surprise to me. It was nice to see JRT, the `JRD' plane beside the other offering from the Tatas, Vistara, was interesting. Is this for operational reasons, or simply pressure from IGIA to take up (costlier) slots at T3, instead of the jam-packed T1-D/C? Do Vistara and Air Asia India actually share some work force? I doubt the Engineering part, at least, since even the power-plants are different in the two fleets, and the two are competitors, in some sense.
`One plane on the ground for 01:40 in the middle of the day: thank you for the heads-up, else I could not have spotted the beautiful VT-JRT! It completely stood out.
The `What Next' analysis at the end was extremely interesting for me.
Management change hmmm. going by what you told me, in a personal chat.
The Tatas going aggressive on the post-5/20 environment: something to look forward to, given that Air Asia India will have significant LCC presence, which will scare Indigo and Spicejet, and the other international LCCs as well, due to the relatively well-run parent airline.
Red skies and black balance sheet: ha ha!
Thanks once again, for an extensive though-proving article!
Cheers, Sumantra.

Air Asia India started operations in June 2014 amidst much fanfare, including an event where bikers with Air Asia flags and the top management in open deck bus made their way from Bengaluru city to the airport – their main base. I have always been skeptical about growth and sustenance for Air Asia India and while I wish good luck to every airline and operator, so far I have been proved right in terms of Air Asia India. So far we have only seen a serious foot in mouth syndrome which has made me compare the airline with Paramount – another airline which was famous only for announcements.

I think I5 has realized that one cant remain a regional airline and be relevant in India . Hence the DEL move . I see them adding planes and flights irrespective of the 5/20 announcement .

As far as making announcements goes . I feel in the airline business any publicity is good publicity . Branson lived by this rule and still does . For an airline the size of I5 , they need every mention anywhere possible .

I see them growing . Their CEO has a strong focus on breaking even which is a good thing . They have learnt from the likes of KF and hence the focus on profitability .

I just got back from BLR last night on I5 . The morning flight out to BLR had 172 out of 180 onboard . The flight back had about 15 spare seats . So irrespective of group booking they are managing to fill up their planes . Yes they have promo fares on but that should help them have folk experience them and then choose to fly with them in future .

They are brilliant inflight with great crew , super leather seats and very reasonably priced tasty food .

Thanks for your feedback and experience. They have talked a lot about flight additions, so lets see if they do so irrespective of the 5/20. If 5/20 is replaced by DFC - they ll have to add capacity and fly them into north east. . this will be unprofitable!

They are good in terms of crew, seats and food. But overall still clueless in terms of call center, OTP and operations. Delhi will be a tough market to crack and current loads are good but with lackluster yields. Hopefully that should go up too_________________www.networkthoughts.in

Once again Sir, thanks for a very nice and informative article. I count myself really lucky to be among the select few, to receive regular updates about most airlines around, including some of your personal experiences with airlines. I especially remember the haughty response from Air Asia India, and when your official complaint shook `em up.
You make some rather pertinent points in this article, which I have read, and re-read quite a few times since morning. I have always looked at Tony Fernandez with some interest, and his airline coming to India, plus the tie-up with perhaps India's best-known Industrial house, made things even more interesting. You have compiled the events, the announcements, and the facts and figures, beautifully.
You have also seamlessly pointed to many articles in the press, which makes your article a one-stop joint for a thorough self-complete analysis on the given topic. Lovely.
The analysis of the Chennai-Bengaluru pullout was very interesting.
The Delhi addition, and that too at T3, came as a bit of a surprise to me. It was nice to see JRT, the `JRD' plane beside the other offering from the Tatas, Vistara, was interesting. Is this for operational reasons, or simply pressure from IGIA to take up (costlier) slots at T3, instead of the jam-packed T1-D/C? Do Vistara and Air Asia India actually share some work force? I doubt the Engineering part, at least, since even the power-plants are different in the two fleets, and the two are competitors, in some sense.
`One plane on the ground for 01:40 in the middle of the day: thank you for the heads-up, else I could not have spotted the beautiful VT-JRT! It completely stood out.
The `What Next' analysis at the end was extremely interesting for me.
Management change hmmm. going by what you told me, in a personal chat.
The Tatas going aggressive on the post-5/20 environment: something to look forward to, given that Air Asia India will have significant LCC presence, which will scare Indigo and Spicejet, and the other international LCCs as well, due to the relatively well-run parent airline.
Red skies and black balance sheet: ha ha!
Thanks once again, for an extensive though-proving article!
Cheers, Sumantra.

Thank you for the kind words !
As for T3 – it is lack of capacity at T1D + same operating cost at T3 like T1D which is attractive. Besides the congestion is much lower at security and gates!

To the best of my knowledge – no work force sharing between UK and I5.
Going by 6Es existing international network and that of SG – I doubt both would be hit on international segments because of I5. But indeed Air Asia will have better recognition in Middle east or say markets like KTM_________________www.networkthoughts.in

Thanks, Sir: I guess I am completely outdated in my information, since when SG and 6E went international, there was a huge amount of pressure (especially from 6E) to have its international ops from T1-D itself, for the cost-differential, as well as a crucial hub-formation. There were many plans (some changes had also started!) of doign some rearrangements around T-1D to cater to a segregated International section, but this was pushed back to square one very quickly, I guess.
Cheers, Sumantra.

AirAsia India has halted its expansion plans after just a year in business as it waits for a government decision on whether to change a protectionist measure regulating overseas flights, the budget carrier’s chief executive said.
...

“We’ve said let’s have a wait and see approach,” he said.

The rule requires a carrier to be 5 years old with a fleet of 20 planes before it can fly abroad. It is unique to India and was aimed at growing the nascent domestic aviation industry.

“There were promises about getting some clarity on that before we launched,” said Chandilya “I haven’t seen anything from this government that is about open skies and free markets.”

Politicians and goverments have been promising us Roti-Kapda-Makan-Pani since Independence. No sane businessman would start a business based on government's promises.

I guess they would keep a very low profile for 4 years and then ramp up to 20 aircrafts and start flying to KL on their 5th birthday.

AirAsia India on Tuesday announced its latest service ‘Red Carpet’. Under the service, passengers of AirAsia India flights from Bengaluru and Delhi airports can avail of porter service, priority check-in with a dedicated counter, access to the lounge with unlimited meals and soft beverages, priority boarding and priority baggage on arrival. The service can either be pre-booked through website at Rs.800 per person or bought at the airport for Rs.1,000.

On 1st of June I wrote about the numerous U turns – Air Asia India has taken in the last one year. (Air Asia India – The “U” turn airline), a lot of media houses have subsequently come out with articles related to growth of Air Asia India and news that TATA’s may increase stake in the venture. This also led to rumors of management changes and change in strategy.

Between then and now the airline has again gone public blaming the policy framework in the country for its slow growth. I find these really unfortunate and only points to lack of home work on the airline’s side before entering the country for business.

While today there is debate and discussion happening on removal of 5/20 rule allowing newer airlines to fly international and changing the Route Dispersal Guidelines, when the airline decided to enter the country in 2013, it should have been well aware what the rules were and how the existing airlines are working around them. The rules may not be perfect or supporting open market, but they are the rules of the land and the airline should have been fully aware about it rather than blaming the policy and framework two years down the line._________________www.networkthoughts.in

I find these really unfortunate and only points to lack of home work on the airline’s side before entering the country for business.

.

I don't think anything else can be expected from an airline, one of whose 30 year old directors said that 'only grey cells were necessary and not grey hairs', when asked about her age and lack of experience in the airline business.

Clearly the grey cells (or the lack of them) have been showing, haven't they?_________________I don't know which is the more pampered bunch : AI's widebodies (the aunties) or Jet's widebodies (the planes).
-Jasepl

I find these really unfortunate and only points to lack of home work on the airline’s side before entering the country for business.

.

I don't think anything else can be expected from an airline, one of whose 30 year old directors said that 'only grey cells were necessary and not grey hairs', when asked about her age and lack of experience in the airline business.

Clearly the grey cells (or the lack of them) have been showing, haven't they?

I find these really unfortunate and only points to lack of home work on the airline’s side before entering the country for business.

.

I don't think anything else can be expected from an airline, one of whose 30 year old directors said that 'only grey cells were necessary and not grey hairs', when asked about her age and lack of experience in the airline business.

Clearly the grey cells (or the lack of them) have been showing, haven't they?

AirAsia India CEO Mittu Chandilya said there are some confident signs of Tata Group increasing its stake in the airline but buying out Bhatia's shareholding (CNBC-TV18, 22-Jul-2015). He said: "You will hear that update when it becomes a little bit more clear. There were discussions as you would expect but it is just a sign of confidence." He noted that there is "confidence across all shareholders and this is why I said we don't have a problem with capital or funding because everybody has been happy with the progress that they have seen." He continued: "It has been very much in line with what we expected. What the shareholders and the board have been very excited about is that we have learnt very quickly and we have incorporated that in the model that is required for India. So, there is a lot of optimism and that naturally ends up in discussions which are happening but you will hear about it when things get a little bit more crystal

AirAsia India stated it reached “the 1 million guests flown mark a little while back” (theflyingengineer.com, 10-Aug-2015). It is expected this milestone was reached earlier this month. The carrier, in May-2015, had expected to reach its millionth passenger before its first anniversary on 12-Jun-2015 but in Jul-2015, the carrier said it would likely reach the milestone in Jul-2015.

AirAsia Group confirms that Tata Group has increased stake in AirAsia India to 41%
News
20-Aug-2015 10:41 AM
AirAsia Group CEO Tony Fernandes confirmed that Tata Group increased its stake in AirAsia India from 30% to 41% after acquiring 11% from Arun Bhatia of Telestra Tradeplace Pvt Ltd, whose stake has declined from 21% to 10% (DAILY, 18-Aug-2015). Mr Fernandes however declined to speculate on whether Tata Group would continue to increase its shareholding in the carrier, stating: “[I am] not sure, but they love what we are doing and want to increase [its stake]". Tata Sons also confirmed: “We are in the process of subscribing to the capital of AirAsia India, which will take our stake to 41.06% from the current 30%. As and when we have other information to share, we will inform you.”

AirAsia India MD and CEO Mittu Chandilya said the carrier plans to more than treble the number of employees from 800 to around 2500 over the next 12 months (Economic Times, 13-Oct-2015). Mr Chandilya commented: "The next phase for AirAsia India is growth... We are not interested in degrees or work experience in the aviation industry. We hire on attitude and life experience. We would be glad to absorb talent with the ability to question and give innovative ideas". The company intends to hire across all levels and functions including ground operations, security, pilots, finance, and marketing. The airline claims to have a low attrition rate of 4%. Mr Chandilya added: "Our strength lies in our people. We ensure that we hire right and train them adequately. The attrition is taken care of as a result... We are looking at non-IITs for fresh engineering graduates who have the urge to learn".

There was frenzy and pictures being shared after I tweeted about unconfirmed reports of VT-APJ being the next registration for Air Asia India. The aircraft which is already in Hyderabad is MSN 4346 and has operated with Air Asia Indonesia before making her way to India.

The airline is expected to start commercial service with the 6th aircraft in the first week of November with the likely date being 5th November. The aircraft will be based in Delhi and will operate 6 flights a day. This will be the third aircraft to be based in Delhi.

The airline will launch 2nd Daily service from Delhi to Guwahati and return with the new service being an evening flight departing Delhi at 17:35 and Guwahati departure at 20:25. Currently Jet Airways & Spicejet have two frequencies each while GoAir and Air India have one frequency each. IndiGo has two frequencies on Delhi to Guwahati and three on the return. With the timings at which Air Asia proposes to operate the flights, these would be the last departure from both Delhi and Guwahati.

The airline will also start its 3rd Daily service on Delhi to Goa in time for the peak winter season. The new flight would depart for Goa from Delhi at 11:40 and the return would depart Goa at 14:35 hours. IndiGo operates 5 flights on the Delhi – Goa – Delhi sector each way, followed by Spicejet which operates two. Air India & GoAir operate one each. Vistara currently operates one flight a day which would be increased to two on few days of the week from November. The new Air Asia India flight will be the 13th Daily flight on the sector

The airline is expected to fill up the morning slot with a direct flight between Delhi & Vizag which has a daily direct flight from IndiGo and Air India. Air Asia India currently operates to Vizag from Bengaluru.

The new rotation will have a utilization of 14 hours and 10 minutes with 6 flights. This will reduce the average flight count per aircraft marginally but increase the average utilization of the fleet._________________www.networkthoughts.in

For me, this article was interesting primarily for the following reasons:
- I had followed your WA group comment on the new plane, with some interest (since I am not on Twitter, and not regular on FB).
- Plane names, dedications are all fine, and do the PR well, but the service on the airline should see improvements. Pricing has risen high to keep up with returns and the competition, but service levels are not commensurate with other parameters, unfortunately. No, not even the intiial USP of nice BoB offerings.
- The timings on the Guwahati sector look especially attractive. I had explored this since Papa has an upcoming trip to Guwahati, and had this flight been started a bit earlier, it would have been more convenient for him! He chose the 9W flight back to Delhi.
- GOI: am I missing something here? Isn't AI thrice daily on DEL-GOI? Of course, the only direct flight is the DME international connector, the others are via BOM.
Thank you for a nice update!
Cheers, Sumantra.

I wasnt aware about the BoB offering not being as good as it was before. The yields have gone because of the DEL base - with a larger pie, the loads have to be better and also yields are higher than BLR.

GAU indeed seems like a nice route where they could make a killing and if they start making a killing, we know whom to expect soon. These flights start in November - which is very close to when the NEOs start coming for 6E. With additional disposable capacity, I am sure I5 will be matched route by route, flight by flight, slot by slot.

GOI - Yes AI is 3x but only 1x direct. Then 6E will also see an increase since they operate DEL-AMD-GOI, so not counting the one stops !_________________www.networkthoughts.in

Air Asia has messed up the process to cancel a ticket and claim a refund. It's no longer to do it via "Manage your booking". They insist you fill up a form on their Malaysian site, with your PNR details - and the form can be filled (supposedly) even after you've missed your flight. Sounds like a missed opportunity for Air Asia - if they take the cancellations in advance, they can sell those seats at a higher last minute fare._________________We miss you Nalini!

AirAsia India on Tuesday said it has scaled up flight services to Guwahati and Goa from the national capital during the winters.

Besides, the low-cost carrier has also offered an all-in-fares from as low as Rs 3,990 for the two new flights for a limited period with travel validity going up to February next year.

AirAsia India, which has recently inducted the sixth aircraft in its fleet, would now operate three daily flights on the Delhi-Goa route, up from two flights a day, while the frequency on the Delhi-Guwahati route would go up to two from current one, as part of the winter operations.

"These additional services to Goa and Guwahati would commence operations from November 17," AirAsia India said.

"With this increase in frequency, the airline will operate 38 flights connecting 10 destinations across India," it said.

"The positive load factors and performance standards in these sectors has enabled us to increase our frequencies, making the connectivity stronger. As we step into the peak travel season, increased connectivity to Guwahati from the capital will enable guests to plan their trips during the festival period. Guests can also make best use of our additional flight to Goa from Delhi to plan their trips to the most sought after destination for the year-end and New Year," AirAsia India Managing Director and Chief Executive Mittu Chandilya said.

For me, this article was interesting primarily for the following reasons:
- I had followed your WA group comment on the new plane, with some interest (since I am not on Twitter, and not regular on FB).
- Plane names, dedications are all fine, and do the PR well, but the service on the airline should see improvements. Pricing has risen high to keep up with returns and the competition, but service levels are not commensurate with other parameters, unfortunately. No, not even the intiial USP of nice BoB offerings.
- The timings on the Guwahati sector look especially attractive. I had explored this since Papa has an upcoming trip to Guwahati, and had this flight been started a bit earlier, it would have been more convenient for him! He chose the 9W flight back to Delhi.
- GOI: am I missing something here? Isn't AI thrice daily on DEL-GOI? Of course, the only direct flight is the DME international connector, the others are via BOM.
Thank you for a nice update!
Cheers, Sumantra.

Having just flown I5 and Pre ordered Meals on both legs , i can definitely say the food served was tasty with very decent portion sizes .

The Service too was outstanding . It wasnt very formal and regimented but warm and personal none the less .

By the end of the Second BOB round the crew had sold out pretty much all the stock they had onboard . The food and snax onboard were reasonably priced too .

Having just flown I5 and Pre ordered Meals on both legs , i can definitely say the food served was tasty with very decent portion sizes .
The Service too was outstanding . It wasnt very formal and regimented but warm and personal none the less.

It is nice to hear about a turn-around for the better after a few bad experiences of my family and colleagues. And coming from an industry insider, it is certainly nice to hear.
Cheers, Sumantra.

AirAsia India almost trebled its quarterly losses in July-September over the previous year, making it formidable for the carrier to make good Tony Fernandes' claims that it will post a net profit in the December quarter.

The airline posted a loss of 41.3 million Malaysian Ringitt (Rs 65 crore), compared with 15.7 million Malaysian Ringitt (Rs 24.71 crore) a year earlier. AirAsia posted a net loss of Rs 44.15 crore in the April-June quarter. The numbers came in despite revenues doubling on year to Rs 131.2 crore. The airline carried 4,16,182 passengers during the quarter, up 225 per cent on year while its capacity increased 221 per cent to 5,45,760 seats. Load factors increased only 1 percentage point to 76 per cent showing the airline has not been able to garner enough demand for its flights.

Fernandes, the CEO of AirAsia Berhad which owns 49 per cent in the company, had said earlier this month that the airline will post a net profit in the October-December quarter.

"There is only one profit in my mind and that is net profit," he had said adding the airline has been successful in keeping costs down, although it has kept itself small with a fleet of just five planes. AirAsia's other units in Malaysia, Indonesia, Philippines and Japan also posted losses in the July-September quarter with only Thai AirAsia clocking a profit.